How can you save for your child?

Instant access savings

They let you pay money in and take it out whenever you want, but do not usually offer very competitive interest rates.

If you think you will need access to your child's savings then an instant access savings account could suit your needs.

Withdraw anytime

Low interest rate

Regular savings

These accounts let you save on a monthly basis. There is usually a maximum amount you can pay in each month, for example £100 per month. They can offer a high interest rate and instant access to your money.

Flexible access

High interest rate

Only save small amounts at a time

You have to pay every month

Fixed term savings (bonds)

You can take advantage of higher rates by locking your child's savings away for up to 5 years.

You have to be prepared to leave the funds until the end of the term as you cannot make withdrawals without big interest penalties.

High interest rate

No withdrawals

Junior ISA

You can save into a tax free Junior ISA on behalf of your child. You can pay in up to the Junior ISA allowance which is £4,368 in the 2019/20 tax year, and add more money in each new tax year.

These accounts usually pay a high interest rate and let you deposit money when it suits you.

When your child reaches 18 years old the account converts into an instant access ISA in their name.

Any interest earned from a Child Trust Fund or Junior ISA is already tax free, and is not included as part of either the £1,000 or the £100 savings allowance for children.

Can your child control the account?

No, unless they open an account solely in their name.

Most children's savings accounts can be opened in your child's sole name from the age of 7.

Having a children's savings account is the same as having an adult savings account, so there will be annual or monthly statements sent in the post updating you on the savings balance and interest rate each year.

If you choose for your child to manage their own account they are responsible for any administration that comes with the account, for example;

Signing for withdrawals

Signing to close the account

You will not be able to access any information on your child's account without their consent if it is in their sole name.

If you open a savings account on behalf of your child, the account automatically converts into their name when they turn 16. You will be notified of this change a few months before it happens.

Which account should you choose?

If you already have a lump sum of money and do not think you will need it in the foreseeable future, then look at putting the money into a fixed term bond in your child's name only, or a children's fixed term bond as they usually offer high interest rates.

If you do not have a large amount of money to put away for your child yet, but are happy to pay something each month you could open a children's regular savers account.

Some accounts give you flexibility with how much you pay in each month, so if you are cannot pay in one month you will not be penalised.

If you want to start saving but are unsure whether you will need your money for emergencies then consider a children's instant access savings account.

Although the interest rates may not be high, you can withdraw and deposit money when you like.

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